How much money buys happiness? A wide body of research suggests the number is approximately forty thousand dollars a year. Daniel Gilbert, professor of psychology at Harvard University, says once you have enough money to meet basic needs – food, shelter, but not necessarily cable —incremental increases have little effect on your happiness.

Aaron Karo, comedian and author, responds to the number with, “If you want to draw a line in the sand, happiness is having enough money so you don’t have to move back in with your parents.”

To someone who just spent four years in college living off nine-thousand-dollar loan stipends, an increase to forty thousand means a lot – moving from poverty to middle class. But it’s a one-time rush. After you hit the forty-thousand-dollar-range money never gives you that surge in happiness again.

Twentysomethings who are looking for happiness from their careers will benefit from research about their parents’ choices. Richard Easterlin, professor of economics at University of Southern California says previous generations have proven that our desires adjust to our income. “At all levels of income, the typical response is that one needs 20% more to be happy.” Once you have basic needs met, the axiom is true: more money does not make more happiness.

So then one asks, what does matter? The big factors in determining happiness levels are satisfaction with your job and social relationships. And in case you found yourself slipping back to thoughts of salary, according to Easterlin, “How much pleasure people get from their job is independent of how much it pays.”

Unfortunately, people are not good at picking a job that will make them happy. Gilbert found that people are ill equipped to imagine what their life would be like in a given job, and the advice they get from other people is bad, (typified by some version of “You should do what I did.”)

Gilbert recommends going into a career where people are happy. But don’t ask them if their career makes them happy, because most people will say yes; they have a vested interest in convincing themselves they are happy. Instead, try out a few different professions before you settle on one. For college students, Gilbert envisions this happening with part-time jobs and internships at the cost of “giving up a few keggers and a trip to Florida over spring break.” But even if you wait until you enter the workforce, it makes sense to switch from one entry-level job to another; no seniority and scant experience means you have little to lose. So it’s an ideal time to figure out what will make you happy: Use a series of jobs to observe different professions at close range to see if YOU think they make people happy.

It’s simple, proven advice, but few people take it because they think they are unique and their experience in a career will be different. Get over that. You are not unique, you are basically just like everyone else. Gilbert can, in the course of five minutes, rattle off ten reasons why people think they are unique but they are not. For example: We spend our lives finding differences between people to choose teachers, band mates and spouses, so our perception of peoples’ differences is exaggerated… And then Gilbert gets to grapes: “If you spend seven years studying the differences between grapes, no two will look the same to you, but really a grape is a grape.”

So your first step is to stop thinking you’re a special case. Take Gilbert’s advice and choose a career based on your assessment of other people in that career. You next step is to focus on social relationships, because in terms of happiness, job satisfaction is very important but social relationships are most important.

And by social relations, most researchers mean sex – with one, consistent partner. So consider giving your career aspirations a little less weight than you give your aspirations for sex. For those of you who like a tangible goal, David Blanchflower, professor of economics at Dartmouth College says, “Going from sex once a month to sex once a week creates a big jump in happiness. And then the diminishing returns begin to set in.” He adds, to the joy of all who are underemployed, “It’s true that money impacts which person you marry, but money doesn’t impact the amount of sex you have.”

Maybe all this research simply justifies the twentysomething tendency to hold a series of entry-level jobs and put off having children. Says Karo: “All we really want is to get paid and get laid.”

You’ll be able to contribute more tax-free money to your 401(k) next year, the IRS just announced.

The contribution limit for employees participating in pension plans including 401(k)s, 403(b)s, most 457 plans and the federal government’s Thrift Savings Plan will be $17,000 for the tax year 2012.

That’s $500 higher than the $16,500 limit this year, and marks the first increase since 2009. The reason? Inflation.

Pension contribution limits aren’t the only amounts the agency has boosted due to the increased cost of living.

Starting in 2012, taxpayers will also be allowed to claim personal exemptions of $3,800 — up $100 from 2011.

The new standard deduction will be raised by $300 for married couples, by $150 for singles and by $200 for heads of household. Tax bracket thresholds will also be higher for 2012.

The maximum Earned Income Tax Credit is $5,891 for 2012, up from $5,751 in 2011. And the qualifying income limit has been boosted as well — to $50,270 in 2012, from $49,078 this year. Several other tax benefits — including the foreign income deduction and the annual deductible amounts for Medical Savings Accounts — will also go up.

Other benefits, including the additional standard deduction for blind people and senior citizens, remain unchanged.

Many senior citizens will be helped in another way next year, however. Social Security recipients will receive a cost of living adjustment of 3.6% starting in January — the first raise in three years.

Hello NeedMoney,

Although I have never been a victim of identity theft, a very close friend of mine was. I can attest to the sheer agony fixing all of the damage entailed for her, and ever since witnessing her ordeal I have been especially careful to take steps ensuring that I do not fall victim to identity theft. Some of these steps might seem like a bit of a pain, but I can assure you this inconvenience pales to the suffering caused should someone get a hold of your identity. The most effective basic steps you can take in order to protect yourself are:

1. Check Your Credit Report

Your best line of defense is to be fluent with what is in your credit report, and to check it often. The earlier you catch possible identify theft — the easier it is to fix it.

2. Protect Your Social Security Number

Only give out your social security number when absolutely necessary. Only give out your social security number to the most trusted of institutions.

3. Shred Financial Documents

Identify theft often starts with documents which thieves pick out of your garbage. Shred all credit card statements, bank statements, brokerage statements, etc prior to throwing them out.

4. Use Encryption

Criminals often steal the financial information of others online. You can help protect yourself against this by encrypting all sensitive data on your hard drive and within your emails. This sounds more complex than it really is — a simple online search will pull up ample sources which explain how to do this in simple terms.

Failure to take the four above steps can lead to your identity being stolen — and myriad hours of work, annoyance and frustration when trying to fix it.

James

Since 2008, China has pegged its currency exchange rate to be fixed to the US Dollar, but those days appear to be over for now. In news that got the attention of forex traders everywhere, the Chinese central bank announced the peg would end but also warned that that a sudden appreciation or revaluation would not be allowed.

While this opens the doors for long term plays on the value of the Chinese yuan, also known as the RMB, skeptics in the U.S. think seeing is believing. Senator Charles Schumer said the statement was vague, and Timothy Geithner, the U.S. Treasury Seceretary, still might release a report detailing Chinese currency manipulation.

This also plays into the value of the U.S. dollar, as China is the largest holder of U.S. bonds, and strengthening its own currency could be the beginning of China slowing down its buying of U.S. debt. A sudden drop in the market for U.S. treasuries could hurt the Dollar, but it is unclear if that will happen for sure.

Overall, this was welcome news for forex investors and the global economy. While there are some issues to watch in terms of the U.S. economy, this could also help balance America’s trade deficit and help the economy that way. It is a clear change in policy that could mark the beginning of a new era in international currency markets. If nothing else, the future developments will be fascinating to watch.

More news about credit card changes in the U.S. The Federal Reserve set regulations for credit card issuers which limit penalty fees to $25. The average of existing penalties is $39, so this is welcome news for many card holders having trouble with payments.

The rules do state, however, that there can be an exception to the limit for repeat violators. If, for instance, a borrower has 2 late payment violations in 6 months, the second penalty can be $35 if the bank is able to justify it to regulators.

Another factor is that the penalty cannot exceed the violation, meaning that a bank cannot charge the $25 amount for a missed minimum payment of $15. Also, there cannot be multiple penalties for a single late payment.

While this is good news, it is not a reason to become any more willing to spend recklessly on a credit card. Critics of the rule say that this will keep banks from being able to price their fees according to how risky the borrower is, so it means less people will be able to get credit. Another thing to watch out for is that banks often get creative and come up with new fees when an old type of fee has been outlawed. This development is a good reminder to be careful of your credit score, because as more regulations come a better score will be needed to have the flexibility of available credit. Staying on top of your score plus any new fees or changes coming from the banks will help you get the most efficient use out of credit cards if the need arises.

Consumers are watching every penny in the current weak economy. Several new websites seek to capitalize on this bargain hunting, and they attempt to leverage the power of group purchasing. Individuals can band together on these sites in order to obtain deep discounts on everything from groceries to luxury vacation travel. Although there is not yet an official term for this phenomenon, industry insiders are terming it “crowd clout” or “community shopping”. LivingSocial and BuyWithMe are prominent examples of players within this niche, but GroupOn has already emerged as a leader in this space with over a million members located in 18 countries. GroupOn was able to achieve this scale via its recent acquisition of CityDeal which greatly expanded its reach.

Members of these sites receive daily emails advising of group buying opportunities. If enough members opt to purchase the offer, then all of them get the advertised deep discount. Alternatively, if the number of members electing to buy the item or service does not meet the stated threshold, then the offer is rescinded. This ensures that the advertiser sells the bulk amount justifying the greatly reduced price. Currently, most offers on this site focus on groceries, restaurants and local service businesses. Quite commonly, offers from local restaurants entail over a 50% discount. Many analysts assert that current cautious buying habits will stay with consumers even after the current recession recedes — which is good news for sites like GroupOn. Membership to many of these sites is free — so you have nothing to lose by checking out local offers in your area.

Financial literacy in America is currently in a sorry state, and Visa is seeking to improve the financial acumen of both American kids and adults. To this end, they have introduced a free iPhone App titled The Practical Money Skills Calculators. A wide array of features comes along with this app, and it can be used when analyzing auto loans, credit card terms and mortgage offers. The app also contains helpful tools when it comes to planning for retirement and analyzing your investments. The app is kid-friendly, and Visa is also providing teachers across the country with lesson plans geared around the app’s functionality.

Important family financial issues like budgeting for a new baby or saving for your child’s education are addressed by this app, and it also allows for customized calculations geared to your family’s unique financial circumstances. Visa is running a parallel educational website named PracticalMoneySkills.com which provides further instructions on how to use the app and also is a good source of personal finance related news. In order to keep kids interested, the app also contains entertaining games — which are based around providing financial lessons. Those looking for help navigating the often confusing financial waters are well served to check this app out.

HelloWallet and Mint.com have emerged as two of the most popular websites seeking to give consumers financial advice. Upstart HelloWallet recently fired a shot at Mint asserting that Mint does not truly look out for the best interests of their users. The claim is that Mint derives its revenue from advertisers — most of whom are seeking to sell financial services products. This presents for a glaring conflict of interest — is the Mint site featuring a given product or service because they truly believe in it, or because that company is simply an advertiser on the Mint site? Whereas Mint earns its revenue via advertising, HelloWallet accepts no advertisers and instead charges users a modest $5 fee per month for the site’s service.

HelloWallet CEO Matt Fellowes fired this shot at Mint as the war to gain financial advice market share heats up. Interestingly, Mint’s original business model did not include advertisers and involved a subscription fee along the same lines as HelloWallet currently charges. When Mint was bought by Intuit this was changed to the current advertising model after the initial subscription model failed. Nonetheless, this did not discourage the launch of HelloWallet. Industry analysts are closely following this skirmish, and opinion is split concerning which of these business models will win out. In the end, consumers are the winners now with two choices for free — or very inexpensive — personal financial advice.

The legislative process and compromises often result in laws and policies which can be quite illogical. Take for instance the current status of the estate tax. Several years ago there was a pitched battle between the parties over future rates for the estate tax — which spawned the very effective GOP tactic of referring to it as the “death tax” which gained public support against it. A compromise was reached whereby the estate tax would be reduced over several years, and then it would go back up again. One quirk within the compromise was that if you die during the year of 2010, then you would owe no estate taxes. However, if you pass away in 2011, then your heirs will pay a whopping 55% of what they inherit to the federal government.

Look at the example of Texas energy tycoon Dan Duncan. He was both unlucky and lucky. The unlucky part related to dying from a sudden brain hemorrhage, but he was lucky that it happened before the end of the year. His fortune, estimated at over $5 billion, will now convey to his heirs without a penny of tax. If here were to have suffered this misfortune next year, then his heirs would have owed over $2.5 billion to Uncle Sam. There is no rhyme or reason behind this 2010 exclusion — it is just how the compromise worked out. Obviously, no one wants to die — but if you gotta go, then 2010 is the year to do it.

Senator Tom Harkin from Iowa has attempted to address this issue by putting forth legislation which would limit these fees — transaction charges which oftentimes can equate to over 10% of the withdrawal. His proposal seems ultimately fair and necessary — but for some reason it fell upon deaf (both literally and figuratively) ears of fellow aging Senators who are not quite familiar with these ATM contraptions. Powerful Senator Ben Nelson admits he has never once used an ATM during his entire life. Fellow Senator Mike Johanns concedes he can count on one hand the number of times he’s withdrawn money via an ATM.

Charles Grassley, the ranking GOP member on the applicable Senate Finance Committee, also admits that he has never used his bank card to withdraw cash. This goes a long way to explain the apathy on the part of our lawmakers concerning the issues which most effect the average person. It would be a safe assumption that if these Senators were charged a $3 fee to draw their cash at a teller, then Senator Harkin’s amendment would be taken a lot more seriously.

A main reason behind the current mortgage crisis is the complex way mortgages were sliced and diced after they were written. Banks who funded mortgage loans then quickly flipped them — often into convoluted CDO and CLO instruments characterized by thousand page transaction documents. The result of this often was that it became nearly indecipherable when it came to ascertaining which entity actually owned a particular loan after it was sold. Consequently, in many instances when a bank is forced to show evidence of the current status of the loan they are unable to.

Without being able to “produce the note” and subsequent chain of title, the bank can’t proceed with the foreclosure. There is a story of one man in Florida who has shown up in court 12 times to defend the foreclosure action against his home, and each time the bank could not produce note documentation to the judge’s satisfaction. This man is still living in his home even though he has not paid his mortgage in almost 3 years. The ethics of this strategy is debatable, but when it comes to preventing your family from being thrown out on the street the luxury of philosophical analysis of morality often takes a back seat to hard realities.

When seeking a new job, Mr. Brownstein played upon the ego of his potential new employers. He researched who the decision makers are at the advertising firms he was applying for work with, and Mr. Brownstein then subsequently purchased their names via the Google Adsense program. This is Google’s advertising regimen which results in the paid ads you see on the right column when doing a search. Consequently, when these executives in charge of hiring decisions did an “ego search” googling their own name, they then saw a link for Mr. Brownstein’s resume come up prominently on the right column seeing no one else would have ever thought to buy the executive’s name as an Adsense advertiser.

Google charges for this program per click — and Mr. Brownstein incurred a total bill of $6 from Google for their services. He also received a rapid job offer from an advertising firm which was highly impressed with his tenacity and creativity. Those who are seeking jobs can take a lesson from this and attempt to think outside of the proverbial box.